13287 OSBORNE AR lores spreads

Annual Review 2013

www.osborne.co.uk

Contents

Osborne at a glance 2

Chairman’s Statement 4

Chief Executive’s Review 6

Corporate responsibility and sustainability 10

Rail, Highways, Airports and Energy 12

Education 16

Housing 20

Social Housing Maintenance 22

Commercial Property 24

Healthcare 26

Development 28

Innovaré Systems 30

Financial Summary 32The St Alphege Building -A new Learning andTeaching Block, Universityof Winchester

Annual review 2013 0302

Osborne at a glance

RAIL, HIGHWAYS, AIRPORTS AND ENERGY £97mThe company was founded on its civil engineering capabilitywhich remains at the heart of the business. It’s all about workingwith our customers, treating everyone fairly and doing a greatjob. We have particular expertise in successfully deliveringschemes on roads and railways whilst minimising disruption tothe public and our customer’s operations.

EDUCATION £67mAcross primary, secondary and tertiary education there areexceptional needs, through close collaboration in helping ourcustomers to be successful and achieve best use of resource, wehave built a strong reputation for expertise and experience inthese markets.

Our capability and flexibility is reflected in the wide range ofprojects managed from simple classroom refurbishments tobespoke complex award standard buildings with values rangingfrom £1m to in excess of £50m.

We also have the facility, through our sister company Innovareand their SIP panel technology, to offer customers expertise inbuilding highly energy efficient buildings.

HOUSING £54mWe build, maintain and improve housing across the south east ofthe country. We currently have 66,000 properties under our care.Most of our housing activities are for Registered Providers orLocal Authorities. We have a JV with British Gas to bring energysaving proposals which are self-funding to our customers in thismarket. Housing is often about regeneration and throughcommunity engagement and apprenticeships we support ourcustomers in this area.

COMMERCIAL £25mBuilding strong relationships while creating outstanding spaces;we specialise in working closely with developers, end users andlocal authorities, to understand and develop the needs of thescheme, providing design and delivering solutions which areefficient, functional and aesthetically pleasing.

HEALTHCARE £14mWe have the expertise to work very closely with clinicians andhospital administrators to undertake improvements to theirfacilities whilst maintaining the full operational capability of thehospital and respecting the patients.

DEVELOPMENTOur small team works alongside our customers in finding anddeveloping sites to meet their needs along with the provision ofthe most appropriate financing solution. We have expertise indepth in industrial development and student accommodation.In a year we typically work on 5 or 6 schemes at any given time.

INNOVARÉ SYSTEMSInnovaré is a specialist provider of highly energy efficientbuildings. It designs, manufactures and erects buildings utilisingstructural insulated panels.

All figures stated are turnover for period 01 April 2012-31 March 2013.

Innovaré Systems sales are reported under Housing and Development

sales under Education.

WHO WE ARE...Osborne is a family-owned construction services and

development business employing around 750 people. We

want our customers to be successful. We understand that

for most of our customers our job is to make the

construction process as easy as possible. That means both

delivering their stated needs in the built environment and

understanding and striving to meet their unstated needs.

Construction is about teamwork. We know that working

collaboratively and respectfully with our customers and

supply chain delivers the best outcomes. Our job is to

create the environment for our customers where that

culture can thrive.

Our vision is to be a vibrant growing business chosen by

customers for its service-led solutions.

WHAT WE DO...Osborne’s expertise is associated with the built

environment in design, manufacture, project management,

construction, property maintenance and property

development. We work across housing, offices, the

railways, hospitals, student accommodation, roads,

airports, civic buildings, public realm, schools, colleges

and universities.

For Osborne, success is measured as much in ‘how’we

meet our customers’ needs as in what we build or the

volume of our sales.

SOME OF OUR CUSTOMERS THIS YEARNetwork Rail, Hyde Housing Group, Cadogan Estates, Sir

Robert McAlpine, SEGRO, University of Southampton , Morgan

Sindall, Chichester College, London School of Economics,

Highways Agency, Affinity Sutton Group, Skanska, Connect

Plus, University of Winchester, Wates, Foreign and Colonial,

University of Greenwich, Winchester City Council, Chichester

Festival Theatre, Circle Anglia, Legal and General, Ascham

Homes, Hertfordshire Partnership NHS Foundation Trust,

London Borough of Tower Hamlets, Phoenix Community

Housing Association, IESE, Surrey County Council,

Hampshire County Council.

Construction ofThe Adur Ferry Bridge,Shoreham Harbour


2013 Chairman’s Statement

In my first statement as Chairman, I am pleased to beable to report a much more positive outlook with anorder book much stronger than it has been for sometime. Our results for this year, however, have beenpoor. The year has certainly been one of the mostchallenging ones for us, and many in the industry,and this has been reflected in our performance. Wehave seen a reduction in turnover of 9% to £256million and a loss after tax of £2.0 million.

The main reason for the loss has been closing out asmall number of loss-making new build housingcontracts procured over two years ago, but delays instarting some larger projects have also had animpact. As David explains in his Chief Executive’sReview, we have been able to learn from theseproblems, strengthen the business and can lookforward with some optimism.

This optimism is reflected in the Group’s order book, which is

significantly higher than last year at £352 million, with £225

million secured workload for the year to 31 March 2014, an

increase of 51%. While the market remains competitive, we are

seeing good opportunities in all our chosen sectors, and

anticipate growth in turnover and a return to profit in the

coming year.

Cash is the lifeblood of any organisation and has been a key

focus for us during the year so I am pleased to report that this

remains strong at £27.8 million (2012 - £31.3 million).

The safety of those that we work with is of fundamental

importance for us and the last year has seen the business make a

step change in our approach to HSEQ. The focus has moved on

from processes and procedures to personal responsibility and

accountability. Although it may be too soon to draw a direct

correlation, our Accident frequency rate has improved to a 10

year low of 0.23.

We undertook a strategic review during the year and our

strategy remains firmly focused on providing a tailored service to

our customers.

Andy Steele has joined the Board to take the helm of the

Construction business. Andy brings a track record of growing

successful and profitable businesses. I would like to thank Phil

Shortman for his efforts in leading that business through some

significant changes over the last five years.

In our Property Services business we have been working closely

with the Institute of Customer Service to really enhance and

differentiate our offering, and I am absolutely delighted that our

efforts were recognised with the Best Application of Technology

award at the Institute’s 2012 Customer Satisfaction Awards.

Although we have invested in our technology to improve

customer service, our people and our business partners are the

real key to our service, and I take enormous pride in their

achievements. The sector reviews that follow highlight some of

the fantastic work that our employees have been doing, and I

would like to thank them all for their efforts.

The last five years have been difficult for the construction

industry. The market will continue to be uncertain, but there are

signs that it will be more positive, with housing seeing some

recovery, and both Government and Opposition recognising the

need to invest in the UK’s infrastructure. I firmly believe that

there will always be a good market for those businesses that

take a long term view and put the customer and service at the

heart of their offering, and our order book gives us great

opportunities to reinforce this in the coming year.

The Saw Swee HockStudent Centre forThe London Schoolof Economics

There will always be a good market forthose businesses that take a long termview and put the customer and serviceat the heart of their offering.

Andrew Osborne, Chairman

06

A year of hard knocks,learning and renewal.


2013 Chief Executive’s Review

Hard KnocksA loss of £2.0m is unacceptable but it is important to recognise

that even in these challenging market conditions the core of the

business has traded satisfactorily. Rail, Development, Innovaré

and Property Services all exceeded their profit targets and within

Construction the majority of jobs traded profitably.

Our losses were caused by four primary factors. The new build

housing jobs won in 2011 which deteriorated substantially

throughout the year; the failure of our Civils’ operation to win

sufficient work; projects delayed from 2012 into the current year

and the cost of restructuring.

This has led to sales of £256 million (down from £281 million last

year). In response to this downturn and in order to remain

competitive, we reduced our permanent staff from 953 to 738.

This was difficult for the company and included letting go some

senior members of staff in order to create the environment for

learning and renewal.

Across the industry companies have been taking similar action

to ours to address the 12% drop in overall market. Most recently

we have seen the market leader being forced to take dramatic

action to address this downturn.

The year was a challenging one for everyone in the company but

it was also a catalyst for a number of actions in the year which, I

am pleased to say, are already showing significant benefits.

LearningTo embed ‘lessons learnt’, improvements and cultural change

have to become habits which are applied continually.

Last year I reported that we had simplified and strengthened

our governance gateways. The application of these has been

reinforced over the year. This is most visible in the success of

our work-winning teams. The tender success rate has

improved across the company and in Construction from 1:8 to

1:3. Part of these gateways is the clear visibility of the profit

path on all jobs.

The downturn in Civils’ workload has demonstrated our

vulnerability to the peaks and troughs in highway investment.

With increasing opportunities across the broader civils’ market

we have created an Infrastructure business to address rail,

highways, energy and airports. This gives us the critical mass in

programme, project management and engineering skills to meet

our customer’s needs and create a £110m business with a target

to achieve £150m within 3 years.

Over the year we had a number of trade contractors who failed

to perform in instances where we had bought on price alone. To

overcome this we have introduced a clearer Supply Chain Policy

which links to our Improvement Opportunity process. We have

also restructured our procurement team and ensured that

Project Managers must sign off the selection of trade contractors

with the Surveyors.

We closely monitor that the monthly site review process is

taking place on all projects to ensure it is transparent and being

acted upon.

Site and project managers must lead their sites in every respect.

As this clear leadership is felt, so site performance has improved.

Throughout the year we have coached our site and project

managers to lead, and all other staff to actively support those

leaders, in delivering their goals. Our Infrastructure business has

led the way on this.

In November we employed a consultancy to review our strategy.

They confirmed that our customer focused strategy was the

right one and drew attention to a number of areas where

significant improvements could be made quite easily. As a result

we have simplified our leadership structure and realigned our

activities towards the customer (from our internal processes).

Our focus is on tailoring our offeringto our customers’ needs better thananyone else.

David Fison, Chief Executive

Construction of MayflowerHalls 1,104 bed studentaccommodation inSouthampton


We have also run strategy workshops for over 250 people and

developed Value Propositions around understanding the needs

and wants on each project for all our major customer groupings.

RenewalThe Board has taken on a new lease of life with Andrew Osborne

as Chairman and is looking more broadly and further into the

future than at any time whilst I have been with the company.

I list below just some of the actions and outcomeswe are achieving:

08

2012 wasn’t our best year but it was a catalyst for action. Lessons

have been learnt and acted upon. We are renewing our

company, building on its history of customer service and we

continue to drive towards being an exemplar construction

company in the service it supplies its customers. All of our

actions now visibly link through to delivering that customer

service. It is by customer service that we will differentiate

ourselves from others and ‘make our customers successful’ and

create sustainable profits for our shareholders.

2012 was a step change year for us and now there are signs of

economic recovery across the country. These two factors

together make me optimistic about our future. Our budget for

the coming year is to deliver sales close to £300 million with a

return to historic levels of profitability.

Looking forward I believe the construction industry will recover

a little between now and the 2015 Election with the future

thereafter rather unclear. Our focus is therefore on tailoring our

offering to our customers’ needs better than anyone else. We

will also maintain our spread of activities to manage the risk of a

downturn in any single market.

As I write this we are on plan and budget for a much better year

in 2013.

� Our order book at the year-end was up over 50% from the

same time last year, at £225m, with a number of good prospects

under negotiation and a strong future workload pipeline. (I am

pleased to say that at the time of writing this in July 2013 we have

87.5% of the current year’s work confirmed and 16% of next year).

� Andy Steele joined us in July 2013 as a Board Director and

Managing Director of Construction. He brings a wealth of

construction and strategic experience and a number of skills that

complement the other directors.

� We have a simple plan linking our Vision and Mission to the

specific improvement plans within the business.

� We continue to take actions to make our processes more

effective in terms of costs and of supplying management data

that enable the right decisions to be made quickly.

� Health, Safety, Environment and Quality. Throughout the

year we have worked to our HSEQ Road Maps which set clear

milestones for HSEQ Leadership, Communication, Risk

Awareness, Planning Competence, Supply Chain, Strategy and

Assurance. Whilst there is a long way to go, our Accident

Frequency Rate at the year-end was the lowest recorded in the

company’s history.

� The Strategy Workshops and concept of ‘internal customers’

are helping our people understand that their job is to help their

colleagues succeed – rather than monitor, control or tell them –

and by doing that they will ‘make our customers successful’ and

with that create their and our success.

� We have established an HR Roadmap to plot a path from

where we are today to a fully engaged workforce. We

conducted our first engagement survey in February.

� We have four large prestigious jobs on site with a combined

value over £130m which are providing solid cash flow

throughout the year.

� The Winchester student accommodation project was

completed in July 2013 and we are on programme to hand over

our Southampton student accommodation by summer 2014. We

have been named for a further student accommodation scheme

at Brighton. All deliver Development as well as Construction

profits.

� A number of further development opportunities are being

tracked with a good prospect likely to be secured this autumn.

� Innovaré expanded over 50% last year. It is on target to do

the same again this year and will be moving into profitability by

year-end.

Making our customers......successful

As I write this we are on plan and budgetfor a much better year in 2013.

David Fison, Chief Executive

Working at Kingsley GreenAcute Mental Heath Unit,Hertfordshire

As a family-owned business, we are able to take along-term view and our approach to sustainability isdriven by our values - quality, integrity, openness,caring and progressive.

We want to be a good corporate citizen, not justbecause it is good for our business and ourreputation, but because it is the right thing to do.

MarketplaceIn order to make our customers successful we have to

understand their markets, requirements and pressures. Our

customers require a quality service and product and we

constantly assess and review our systems and skills as we strive

for excellence. We have been certified to ISO 9001 for over nine

years and, through a system of internal and external audits, we

identify ways to become even more efficient and effective.

In April 2012, we launched an employee engagement tool – the

Improvement Opportunities model. It encourages employees

and our supply chain to identify and share ways in which we can

become safer; improve our systems, processes and quality;

reduce the impact on the environment and increase our

employees’ wellbeing. Since launch, our staff and supply chain

have generated over 6,000 improvement opportunities and the

model has been shortlisted for an Innovation award by the

British Quality Foundation.

The key to customer service is embedding the service ethos into

all our people. We are members of the Institute of Customer

Service (ICS) and are training staff through their ‘First Impressions’

course, with over 90 people in Property Services trained so far.

We have also invested heavily in improving our IT. Our new

software system in Property Services has been recognised by the

ICS with its 2013 award for Best Use of Technology in Achieving

Customer Satisfaction.

WorkplaceWhatever we do, we do through our people. Developing their

skills and abilities, and providing them with opportunities to

shine is the cornerstone of our future success. Our focus has

been on management coaching and mentoring with regular

structured two way progress reviews.

Over 90% of all of our employees have a Personal Development

Plan that is reviewed annually. The number of ‘one-to-one’

meetings our employees have with their line manager is one of

our KPIs. Although the emphasis in developing skills has been

on workplace experience, we have still undertaken an average of

2.3 formal training days for each employee.

Good communication is vital to employee engagement. We

introduced an employee engagement survey during the year,

and were very pleased to have an 86% response rate to the first

survey.

It is important that any organisation acknowledges the good

work of its people and gives them the recognition they deserve.

We introduced an annual awards ceremony – the Chairman’s

Awards - at our management conference this year, and over 160

individuals and projects were nominated by their peers in six

different categories.

Health and Safety is always a priority and the improvement in

AFR to a 10 year low of 0.23 is pleasing. This represents a halving

in the number of RIDDORs during the year. The Improvement

Opportunity model has greatly improved openness in this area

and is the next step on our road to develop the culture and

behaviours that will deliver lasting improvements.

EnvironmentWe are very conscious of the impact of our work on the

environment and strive hard to minimise this wherever possible.

We work actively with the industry through UKCG, CECA and

RIAG to improve the industry’s performance as well as our own

and have held ISO 14001 accreditation for over nine years.

We have worked hard to reduce our waste through education,

training and improved procedures and now 93% is recycled or

reused. Over three quarters of our carbon emissions come from

our car and van fleet and we have monitored and reduced the

mileage we do, particularly focusing on and supporting the small

number of drivers that do over 20,000 miles a year. We have

introduced car sharing schemes and support low emission cars

by offering “green” parking spaces at our offices for these drivers.

Although our offices are a smaller share of our carbon footprint,

we have reduced these emissions by 42% over the year.

We can also bring change through our technical expertise. Our

subsidiary, Innovaré, delivers innovative energy and fuel efficient

buildings using its i-SIP structural insulated panel system. Its design

expertise has helped Osborne deliver long term solutions for clients

such as Phoenix Housing Trust, Hyde Housing, Golding Homes,

Hertfordshire Partnership Mental Health Trust and University of

Southampton amongst others, including two PassivHaus schemes.

We are also delighted to have achieved BREEAM Outstanding in the

design phase of the New Student Centre for the LSE.

We are always keen to work with our key suppliers and are proud

to have announced a partnership with British Gas to help reduce

fuel bills and make long-term stock improvements to tackle fuel

poverty for residents in social housing.

CommunityWe are committed to the communities in which we work,

supporting the employment of local people and businesses.

Engaging with local people provides a meaningful contribution

to the success of our projects, so we run initiatives throughout

our many projects, from resident meetings, open days, classroom

chats to local charity events.

At our Mayflower Halls project in Southampton we have worked

with Rainbow Life Chances to provide a work placement for

disadvantaged local young people who have struggled to find

work. Working closely with our supply chain, we can invest in

the future through apprenticeship schemes, as well as our

graduate trainee scheme. We support a number of educational

initiatives with awards for students at the Universities of

Birmingham, Oxford, Portsmouth, Southampton, Imperial

College, and also at Chichester College.

We encourage and support our staff to participate in charitable

and fundraising events, and every employee is entitled to a paid

development day to spend working with their chosen charity.

We look to donate at least 1% of our profits to charity, and this

year the figure was over £20,000. We want local communities to

benefit directly from this and so we continue to support

charities near to our offices and sites.


I enjoy all of the work and am very proud ofmyself for getting a job. I have received myCrst pay packet ever and it’s a good feeling.

KimMarsh, 22, work placement onMayCower Halls, Southampton

CorporateResponsibilityand Sustainability

Kim Marsh enjoying herwork placement atMayflower Halls,Southampton

Our projects include the most challenging of live environments

where partnership with our customers and suppliers is essential

for us to complete vital infrastructure work to increasing time

pressures and stakeholder interest.

AirportsOur Gatwick Airport customer had the challenge to refurbish

two major entrance bridges, carrying 31,000 passengers a day

into the South Terminal, a key element of the airport passenger

infrastructure.

Through a detailed understanding of our customer’s concerns we

were able to develop innovative methods and efficient phasing, as

well as handover of individual sections of the footbridge works, to

accelerate the start of an adjacent stakeholder’s project. Our teams

also secured two successive Safety Awards which is a significant

achievement given the level of activity that is procured by the

airport. The solution also enabled the project to be shortlisted at

this year’s ICE South East England Engineering Excellence Awards.

HighwaysThe Boston Manor viaduct carries the M4 motorway into London

and when cracks, putting the structure at risk of failure, were

found in spring 2012, a weight limit was immediately imposed.

The project team had just a few months to devise and implement

a repair solution in time to accommodate the Olympic Games

Infrastructure investment remains crucial to the UKeconomic recovery and we are keen to play our partacross our rail, highways, airports and energy sectors.Our customers are entrusted to invest scarce financialresources to maintain and enhance the UKinfrastructure. Our job is to provide the necessarysupport and creativity to help them deliver maximumvalue for money and by doing so making themsuccessful in meeting their objectives.

During the year we integrated our Rail and Civils’ operations to

create an Infrastructure sector with sales of £100 million+. This

enlarged team provides greater geographic and project

management capabilities and the potential to both grow in its

existing markets and enter the Energy sector. Our aim is to reach

£150 million by 2016.

Efficiency in delivery requires a combination of strong

programme and project management, excellent communication

with flexibility and resources to apply the same professionalism

and pride in output, whether delivering a simple access road or a

complex bridge reconstruction project.

� We aim to offer a more collaborative, considerate and

sophisticated approach to construction by putting our customers

at the heart of our infrastructure solutions and by endeavouring to

create the most efficient build programme to meet ever

demanding sector regulations and customer expectations.

� We work with our customers and supply chain to achieve

efficiency targets by providing innovative, safe and reliable

solutions for end users, passengers and stakeholders.

� We deliver successful projects for our customers and end users.


Working collaborativelyon the CM2 Frameworkat Spaghetti Junction,Birmingham

The four line bridgereplacement at HackneyDowns Station, London

Rail, Highways, Airports......and Energy


traffic. Completed on schedule, the stabilisation of Boston Manor

Viaduct shows what can be achieved when customer, professional

team contractor, designers and suppliers work together

coherently. The work undertaken on behalf of Connect Plus has

been shortlisted as a finalist for the Integration and Collaborative

Working category in the 2013 Construction Excellence Awards.

The Highways Agency said “M4 Boston Manor Viaduct is a critical

structure on our network, linking Heathrow Airport, the Thames

Valley and the West of England to the capital. During five

months of intensive work we completed technically advanced

strengthening work to this 50 year old structure just in time for

London to host the 2012 Olympic Games”

At Shoreham the existing footbridge, built in the 1920s, required

replacement. West Sussex County Council took the opportunity

to not only replace the original bridge but also provide an

improved route for pedestrians and cyclists from Shoreham

Beach, through the town centre, to Shoreham-by-Sea railway

station. This route will also link up with the National Cycle

Network Route improving cycling facilities for local people and

visitors to Shoreham alike. Osborne was appointed to design and

build the new bridge in this environmentally sensitive area with

numerous local interests and stakeholders to be looked after.

Working sensitively with the environment and local

communities, the project demanded innovative techniques to

access works in the tidal estuary to construct the foundations

and supports for the 220m long structure which includes a 50

metre long, 88 tonne central span designed to swing open to

allow river traffic to pass through.

RailKey concerns for our customer at our Northern Rail Bridge

reconstruction at Portsmouth was the interface with, and impact

to, the operational railway, along with the period the road would

be closed to the highway users and the associated disruption to

the local economy and community. Our solution provided a

much shorter period of interruption to the highway and we

believe the innovative techniques that we employed are a first

for a rail bridge replacement. We provided our customer with a

unique wire sawing ‘de-construction’ technique which

eliminated the need for abnormal possessions for removal of the

existing bridge deck. This reduced project risks for the customer,

removed potential disruption to train services had abnormal

possessions been used, along with associated savings in costs

and fees.

We were also delighted to support Network Rail’s Sustainability

Procurement Principles in preserving the heritage of our

railways. Rt Hon Justine Greening MP, Secretary of State for

Transport Buildings, officially opened our revitalised ‘Art Deco’

buildings at Southampton Central Station.

Network Rail had a significant challenge to undertake the

complex demolition and re-construction of bridges supporting

four platforms and four tracks that form part of Hackney Downs

Station, all within 99 hours. Osborne was selected to work in

collaboration with Network Rail’s team to tackle this major

scheme. Open communications between Network Rail, Osborne

and the track supplier resulted in ‘live’ re-planning to deliver a

quality bridge replacement completed with no delays to the

passenger trains. Our ability to work synergistically, and as a

reliable partner, has resulted in the project being shortlisted for

Best Medium Project in the Network Rail Partnership Awards. Our

customer was delighted with the performance of the team.

Our customers are looking more and more towards

self-assurance to increase end user reliability and reduce

duplication and their management costs. At one of our projects

in Hertfordshire we recently went through independent

verification of our project management processes by BSI. Auditor

Andrew Cler was highly complimentary saying that the site

“oozes professionalism”.

Our customer at London Bridge Station had the demanding task

to prepare the station ahead of a £400 million major

development. This year has seen the successful completion of

the final two key project deadlines, with the handover of the

Station Control Room and Station Reception - the culmination of

nine programme critical milestones all delivered on schedule.

We started 2013 as Network Rail’s top supplier in their national

performance league table PRISM, measuring performance across

delivery on time, engineering assurance, delivery as specified,

behavioural aspects, stakeholder interface, contract

administration and safety. Our collaborative approach and

innovation has been recognised as winners of the Network Rail

Customer Service Awards and our ‘Stop Think’ cascade briefing

has been highly commended at the National Rail Awards.

We are on a journey where our vision is that our people will be

vibrant and engaged and continually exceed their customers

and colleagues’ expectations with service led solutions. It is

encouraging to see the benefits to our customers that are being

recognised as we travel along that path.

14

This level of collaboration is a great modelfor future success.

Nick Elliot, Director of Network Rail’sSouth East infrastructure projects

Out with the old and inwith the new footbridgeat Shoreham Harbour


Within the Higher Education Sector we are on course to hand

over major developments to the London School of Economics

(LSE) and the University of Greenwich. Earlier this year we

successfully handed over a new Learning and Teaching block for

the University of Winchester. We have also recently secured work

with the University of Kent that will start on site early in 2014.

Osborne’s capability and flexibility is demonstrated not only by

the sub-sectors of the Education market we work within, but

also in the value and complexity of our projects. These have

ranged in value from c.£1 million to upwards of £40 million, and

from simple refurbishment of classrooms to complex structures

and highly specified, award standard buildings such as those at

the LSE and University of Greenwich.

Followinging on from our 500 bed Winchester student

accommodation development, works are now underway on our

flagship scheme in Southampton to deliver 1,104 units of student

accommodation over 3 multi-storey blocks that are being built

simultaneously. The reinforced concrete frame is now rising and

our sister company, Innovaré, is fitting structural insulated panels

(SIPs) to form the envelope. The first of the off-site manufactured

bathroom pods have been installed and the trade contractors are

all commencing work on time.

We have also been successful at securing work through

frameworks, particularly the Improving Efficiency South East

(IESE) framework. Osborne has become one of its most

successful contractors. This is of particular significance as its

purpose is to generate efficiencies through batching of projects

and collaboration between contractors, which is entirely

consistent with the Government’s recently launched

Construction Strategy for future procurement in all sectors.

It is also particularly encouraging that we continue to pick up

repeat business from previous customers. We are undertaking our

second major project for the LSE, we have recently secured a

second tranche of schools projects with Hampshire and Surrey

County Councils, and we are also now working on a further

project for Lady Margaret School in Parsons Green, West London,

for whom we successfully completed a similar project in 2011.

16

Education

Over many years Osborne has built up a strongreputation for expertise and experience in the educationsector. We collaborate with our education customers,helping them to make the best possible use ofincreasingly limited resources at a time of everincreasing competition. We pride ourselves on doingthis in the most proactive and Dexible manner, wherethe focus is always on supporting the delivery ofeducation to students at all stages of their development.

The last 12 months have proved very successful for the Osborne

Education Team, we have been active across the whole

education spectrum. We have successfully undertaken eight

schools projects in Hampshire, Surrey, East Sussex and Croydon.

We are presently working with Hampshire and Surrey, and also

the London Boroughs of Ealing and Hounslow on a further eight

projects that are expected to start on site during the current

financial year.

Within Further Education we will be handing over a new teaching

facility for Chichester College in time for the new academic year,

and are presently working with City College Brighton on a new

£25 million development that will start, on site, early in 2014. We

have also recently achieved completion of a major refurbishment

project for Worthing College, and are on programme to complete

a similar £15 million development for Bexley College in 2014.

Pupils at Potter’s GatePrimary School get atour around their newclassrooms

Construction of the Schoolof Architecture for TheUniversity of Greenwich

18Annual review 2013 19

The indications are that the Education market is starting to

accelerate and will continue to grow for the foreseeable future.

There is already an acknowledged shortfall in Primary School

places that will soon begin to have a ‘knock-on’ effect for

Secondary Schools. The condition of the schools’ estate

generally is also of particular concern and both of these issues

are acute in London and the South East. The experience that

Osborne has established in working in collaboration with

schools and Local Authorities, particularly through the IESE

framework, will stand us in good stead for securing further work.

We will also be targeting some of the newer developments

within the schools’ market which have considerable political

backing, such as Free Schools, to establish whether this is a

further potential niche market for our business.

We developed a solution at Monks Orchard Primary School in

Croydon with our sister company Innovaré. This project

successfully utilised Innovaré i-SIP system, and this type of

construction is an ideal response to the Government’s wish to see

more use of off-site manufacture and standardisation combined

with energy efficiency within schools procurement. We will be

building upon this expertise and collaboration in coming years.

Our intention will also be to consolidate our position further as a

key player within the Higher Education market. The early stages

of 2013 have seen an upturn of activity in this sector, and we

have a healthy pipeline of work going forward, although it

remains a very competitive market.

2013 also sees the latest in a series of education related activities

which go beyond the traditional contractor role. Having

previously worked with the University of Greenwich to set

challenges for some of their post-grad students, we have now

introduced the Osborne Scholarship, providing sponsorship of a

student in a construction related discipline for the next three

years. We are also working with a number of our current

customers, our supply chain, and industry bodies such as the

CIOB to establish training, work experience, and apprenticeships

for students which enhance their learning experience and create

real opportunities for them in the future.

Education is at the heart of society and touches everyone at

some stage of their lives. Similarly, the provision of high quality

education buildings is at the heart of Osborne’s business. We are

proud to play our part in improving the quality of the learning

environment for all.

Education is at the heart of society andtouches everyone at some stage of theirlives. Similarly, the provision of highquality education buildings is at theheart of Osborne’s business.

John Craig, Business Unit Lead -Education - Osborne

New teaching facility atChichester College,developed through theIESE Framework

The intricate brickwork atthe new Student Centrefor The London School ofEconomics

value of existing facilities to fund a new facility that we

constructed for them. We see these as good examples of how

our expertise at development and deal making can help us

create success for our customers.

We have taken the learnings from the past and are using the

expertise within Osborne to find new solutions for our

customers’ needs. This factor, combined with the upturn in the

housing market, bodes well for the future.

It is well documented that the UK has a greatshortage of housing. Osborne has built houses formany years and we will continue to do so despite theloss making jobs mentioned earlier in this review.

We recognise that our customers’ needs are developing in

response to the reduced funding from central government and

the shortfall in housing and we will adapt accordingly. Many

Local Authorities are now bringing forward schemes to develop

their land banks and we are currently negotiating with several

customers to accommodate schemes late in 2013.

We have had a busy year completing nine schemes. These

included 103 flats at Camberwell New Road for Wandle Housing

Association and 59 dwellings for Notting Hill Housing

Association.

At New Cross, Lewisham we are on our 10th scheme for Hyde

Group to build 204 Code Level 4 properties. We are pleased to

have been shortlisted in the Sustainable Housing Awards 2013 in

the larger new housing project category for our brownfield

scheme at Wardalls Grove, also for Hyde Group.

During 2012 we also developed two schemes with Bexley and

Worthing Colleges where we released the housing development

20

Housing


Within Osborne we continue to learn andare using our growing expertise to Cnd newsolutions that meet our customers’ needswell into the future.

GarBeld Coombs, Construction Lead -Osborne

Above: 24 housing units onHollingdean Road, BrightonLeft: 8 affordable homes inStepney Green - winner ofa RIBA London Award

Celebrating the toppingout of No.37 Farleigh Road,Hackney, London

Our investment in a new integrated IT system has paid dividends

by enabling us to deliver increased customer satisfaction. We

were delighted to receive national recognition for this through a

prestigious Institute of Customer Service Award for the Best Use

of Technology. The judges commented “Osborne are

differentiating through service, placing customers at the heart of

their business strategy and securing a bright future for their

employees by doing so.”

We have continued to drive the focus on customer service this

year with further training being undertaken across all levels of

the business through the Institute of Customer

Service (ICS). Our senior managers took part in a ‘Back to the

Floor’ exercise as part of National Customer Service Week,

gaining valuable insights into the realities of service delivery

which has helped inform our drive to shape our service to meet

our customers’ needs.

In the latest ICS survey results of our performance, as rated by

our employees and customers, we are pleased to say that we

have achieved a score of 71.15 which compares very favourably

with the UK wide Construction and Development sector score of

61.42, and the UK average score of 65.85.

We believe we have a duty to positively effect the communities

in which we work which is why we have developed our Osborne

Legacy document; defining our Corporate Responsibility and

Sustainability commitments and providing a guideline for

community investment activities.

It has, without a doubt been a busy year, but we are growing in

size and reputation and are fit to face an exciting future.

Osborne Property Services maintain and improve over66,000 houses across London and the South Eastproviding repairs, planned maintenance, voids andcyclical projects for our customers. Since the year endthey have been awarded 22,000 houses from theAffinity Sutton Group.

We are delivering consistently high performance to all our

customers and have been rewarded with additional works from

some of our existing customers. We have also won works from

new customers and rekindled a former relationship; a clear and

tangible statement that our focus on service and sustainable

pricing is working.

We continue to carefully choose the work we bid for with the

result that we now have several good opportunities where we

believe we can win.

We also formed a strategic partnership with British Gas to carry

out works under their Energy Company Obligation. We are

delighted that this is beginning to bear fruit and our first

partnership project will begin at Ascham Homes in the summer

2013, delivering approximately £25 million worth of works at no

cost to the client.

The past year has seen the continuation of the journey Property

Services started two years ago to make us sustainable, fit for the

future and a business recognised as an industry standard bearer for

outstanding customer service.

Our focus remains on three key strategies;

� To embed and further develop our new leading edge IT

software and infrastructure

� To continue our cultural change programme that keeps

customer service at the heart of everything we do

� To identify and select only those customers who want to

work with us through service driven relationships


Social Housing Maintenance

Osborne’s ICS survey results are outstandingand we at Ascham are proud to beassociated with an organisation that takesits commitment to its customers and itspeople so seriously.

Jo Murphy,Deputy CEO of Ascham Homes

Main: Our multi-skilledoperatives have receivedICS trainingBelow: External worksat Hatch Lane forAscham Homes

For our customers to develop new schemes they must have

optimism in the future. We see signs of that optimism gradually

returning in many different places across the market. This is

reflected in our growing work commitment and order book across

our customer base of local authorities, end users and developers.

Our projects currently include a major refurbishment in Sloane

Street for Cadogan Estates, Perth Avenue for SEGRO, Phase 2 of

the Civic Office for the London Borough of Hackney and the

Andover bus garages for Hampshire County Council.

We are seeing increasing opportunities coming to market. We

know that certainty of delivery and the most cost effective

project solution is expected as the norm to ensure a risk-free

project. What we offer in addition is an open, professional and

collaborative approach to understand our customers’ needs and

find solutions that deliver. We work best when we can combine

our expertise and collaborative skills with our customers.

We recognise that to meet different customer’s needs we must

sometimes learn to behave a bit differently from a traditional

contractor.

A great example of this approach in action is our work with the

Chichester Festival Theatre. To secure this complex project we had

to have the total confidence of the theatre. The challenge we faced

was to ensure that from the outset we bridged the gap between

artist and artisan and between the theatre team and us as their

solution providers. We know that to be successful we must find a

way to unite as one team, irrespective of role, expertise or position as

consultant, contractor or client. We needed to gain understanding

and insight which we did by immersing ourselves in the arts, and

accordingly adapted our approach to mirror our customer’s

methods and working practices. We became the cast and they the

production team; they were the directors and we the actors,

implementing their wishes with our knowledge and ability.

Our customers appreciate that we provide expertisein the delivery of commercial property schemescombined with an intrinsic belief that our job is tomake our customers successful.

Our expertise includes new build, refurbishment and fit-out in all

aspects of the workspace environment, including mixed

development and knowledge based industries, out of town retail

and logistic parks. Creating working space that is sustainable,

yet still flexible and fit for purpose, is a primary objective in our

project delivery.

By continuing to build on long-term relationships we have

successfully delivered in the past year further schemes for

SEGRO, Hackney Borough Council and University of Winchester.

At the latter we brought our development expertise into the

equation to fund, develop and deliver a 500 bed, student

accommodation scheme.

Elsewhere we have completed a scheme in Sloane Square,

London for Cadogan Estates involving the refurbishment of

existing buildings to form self-contained office premises and

restaurants. The solution involved some complex and

imaginative structural engineering to enable the buildings to be

re-engineered with some tenants remaining in-situ. The

completed project has become a neighbourhood rendezvous at

the heart of Sloane Square housing the Colbert restaurant

inspired by French pavement cafés.

Also in London we have been working with the Borough of

Tower Hamlets providing a building that would enable them to

integrate a number of essential services from different council

departments. The Council wanted it to be readily accessible to

residents by locating it in one of the busiest parts of the

borough and to be an inviting space that residents would want

to use. Collaborating with our supply chain and our customer

enabled us to value engineer a solution that delivered a high

quality building that met both our customer’s needs and their

budget. The Mayor of Tower Hamlets opened the completed

building the ‘Idea Store’ in April 2013.

24

CommercialProperty


We recognise that to meet differentcustomers’ needs we must sometimeslearn to behave differently from atraditional contractor.

Kyle Bell, Business Unit Lead -Commercial Property - Osborne

Right: Refurbishment workfor Cadogan Estates, SloaneSquare, LondonBelow: Construction at theChichester Festival Theatre

Residents make use of theWatney Market Idea Store,LondonCopyright Idea Store

With the constant changes and challenges facing theHealthcare sector, we continue, to work in acollaborative way with Trusts across the sector,offering our knowledge and experience, to integratetheir Clinical and our specialist Constructionknowledge to improve services, efficiencies and thewell-being of patients.

Our work for the Healthcare market has primarily come from the

ProCure21 Framework contract. We have provided acute care,

specialist healthcare and community care facilities, for both

public and private sector clients including the Lister Hospital,

Newham University Hospital NHS Trust, North Middlesex

University Hospital NHS Trust and Luton and Dunstable Hospital.

As Trusts move to new framework arrangements we have seen a

decline in sales.

However, one of our specialist teams has been working closely

with Hertfordshire Partnership NHS Trust for the past two years in

the design and construction of an 86 bed Acute Mental Health

Unit, incorporating an ECT suite, en suite bedrooms, community

areas and therapeutic surroundings to supplement recovery. This

scheme commenced on site at Kingsley Green in February 2013.

With a value of £31.5million this exciting project will form the

backbone of our health business in the coming year. The scheme

is a very rapid build and incorporates a full frame and envelope

designed in structural insulated panels (SIPs), manufactured and

erected by our sister company, Innovaré.

We expect to work hand-in-hand with both hospital estate and

clinical teams to explore strategies and solutions for financing,

planning, designing, operating, managing, maintaining and

refurbishing their facilities. We constantly challenge design

concepts, making sure that the best solution and budget is

achieved, using the skill of healthcare professionals at every

stage to ensure both innovation and that we meet or exceed

required standards.

Healthcare


Osborne, being a progressive companyhave taken on board the ‘lessons learnt’from past projects. These lessons arebeing implemented to ensure ourcustomers’ requirements are satisCed.

Mike Trigg, Senior Project Manager -Osborne

Main: Installation of the i-SIPsystem at Kingsley GreenRight: An aerial view of thenorth and south blocksBelow: An artist’s impressionof the main entrance

DevelopmentOur initiative and problem solving approach is proving attractive

to an ever increasing range of both public sector and private

sector clients including universities and colleges, insurance

companies, pension providers, local authorities, and health

authorities.

In a busy year for the Development Team, we have seen

increased activity in all the markets in which we operate.

After a slow start we had strong viewings, sales and lettings at

our industrial scheme in Witham, Essex. This has seen the

development now 80% sold or let and we are continuing to see

improved levels of occupier demand.

Our student accommodation offer is continuing to go from

strength to strength.

At the University of Winchester we handed over the first phase of

the 500 bedroom scheme in the year. The development has

been forward funded by F&C and has been completed post the

year-end so that it can be fully occupied by students in the

coming academic year.

Our Southampton development achieved planning and has

started on site. We have forward funded the project with Legal &

General Property. This 1,104 bedroom project is well underway

for delivery by our Construction Team who are on programme to

enable occupation for the September 2014 academic year.

At Brighton, the City College, appointed us as preferred

developer for a student accommodation scheme adjacent to our

college project.

At our land holding in Chichester we have promoted residential

use and we expect to make a planning application in the next

six months.

We are also in discussions on a whole range of other

opportunities where our skills of site identification, acquisition,

planning and in-house construction expertise can benefit our

customers. Our objective is to give certainty of outcome for the

occupier with 100% of the risk transferred to us as developer/

contractor.

We focus on finding funding structures to dovetail the property

needs of occupiers by introducing private investment.

Looking forward, the outlook is promising with an excellent

pipeline of opportunities.

Osborne Development is a small team who canprovide a very personal service and solution-ledapproach to help our customers be successful.


In a busy year for the Development Team,we have seen increased activity in all themarkets in which we operate.

David Sarson, Managing Director -Development - Osborne

The Burma Road studentaccommodation ready forthe new academic year atThe University of Winchester

Above: Workprogressing wellat the 1,104 bedMayflower Hallsstudentaccommodation,Southamptonleft: A view of theBurma Road studentaccommodationfrom St Catherine’sHill, Winchester

Our off-site design and manufacturing-led solution provides a

highly energy-efficient building that is constructed very rapidly

by our erection engineers. It meets the main contractors’ needs

for a quick building envelope, and allows them to reduce other

costs and also the end-user’s needs for lower energy bills.

The continued growth of Innovaré in terms of both quantity and

quality of customers is testament to the focus and drive of the

team. The majority of projects have been delivered through

leading contractors into a variety of different markets, with the

main concentration of activity within the education and

residential markets.

Although historically aimed at the residential market, the

increased activity within education highlights the greater

understanding and acceptance of the benefits the i-SIP system

brings in terms of energy efficiency, speed of installation and

programme certainty. Skanska, Interserve, ISG, Midas, Mansell

and our inhouse construction colleagues in particular have all

utilised the system to deliver educational programmes.

Developing the use of the i-SIP system as an infill panel to

concrete and steel frames has opened up further markets and

opportunities to maximise the benefits of the system.

Application to low, medium and high-rise buildings provides our

clients with a quick and predictable method to improve

programme timings and take cladding off the critical path of

delivery and it is energy efficient too. The delivery of projects

both in-house and for Wates, Sir Robert MacAlpine and Cowlin

have allowed us to develop this application and understand

better how we can deliver the right level of service to meet the

client drivers for this build methodology.

During the year the team has delivered its largest project

to date, £2.5 million, with a full SIP solution installed on the

Grand Bouet project in Guernsey. This incorporated a number of

the additional features and benefits that the Innovaré service

can offer in terms of responsibility for air-tightness and pre-fitted

windows. To serve this increased demand, the depth and

competency of the Innovaré team has been developed, in

particular with the manufacturing output doubling its capacity,

through production engineering advances and improved

engagement and discipline of the team.

Developing our customer-focused service has allowed us to

deliver increased value outside of our package offering through

a holistic approach to design and development. There have been

a number of examples where simple discussions have led to

reduction in cladding costs, window specification and M&E

requirements. The Kidwells project, delivered for Wates Living

Space, provided both a 7% programme saving through the

speed of installation together with a 25% reduction in the

mechanical and electrical costs via the improved thermal

performance the i-SIP system provides.

Innovaré Systems a wholly owned Osborne company,provides a totally integrated service in the design,engineering, manufacture, supply and erection ofstructural insulated panel (SIP) building systems fora range of public and private housing, education,healthcare, commercial and leisure projects forour clients.

Structural insulated panels (SIPs) building systems have been used

in the UK for over 10 years, providing sustainable buildings with

high thermal performance and air tightness for a wide range of

residential, leisure, commercial, healthcare and education projects.

The i-SIP system is a unique offering. We are the only major

provider to control procurement, design, manufacture and

assembly processes for our systems from start to finish. This has

seen Innovaré grow by over 50% in the past year with every

indication that this will be repeated in the coming year.


The continued growth of Innovaré interms of both quantity and quality ofcustomers is testament to the focusand drive of the team.

Pete Blunt, Managing Director -Innovaré Systems

Above: Thefinished buildingat Kidwell’s Estate,Maidenhead, forWates LivingSpaceRight: Flexibility indesign of the newfacetted panels toaccommodatethe round turretsat Cheyne Terracefor Sir RobertMcAlpine

Installation of the i-SIPsystem at Eleanor Streetfor ReGEN on the SkanskaCostain section of theCrossrail project

Innovaré Systems


Finance Three Year Summary

Our performance in the Crst quarter of2013/14 conCrms that our sales and proCtin the current year are set to rebound.

David Fison, Chief Execuitve -Osborne

Head OfficeFonteyn House, Reigate

In the reported year, delayed starts to a number of

projects impacted turnover. All of these projects are now

on-site. Aside from the effects of turnover decrease,

significant losses were experienced on a cluster of

Housing contracts which were procured over two years

ago. All of these projects will have been completed and

handed over to clients by October. The vast majority of

the businesses in the Group performed profitably as

planned and our cash at £27.8m confirms this (£31.3m in

the previous year).

Whilst it is disappointing to report a

decrease in turnover and a loss after

tax of £2.0m in the year overall, I am

greatly encouraged that we are

coming out of this difficult period

stronger and in better shape. Trading

volumes have picked up significantly

since the last quarter of the year,

forward order books are substantially

ahead of the same period last year and we are returning to

solid profitability.

Gordon Shepherd – Group Finance Director

Continuing Operations

2013 2012 2011

£'000 £'000 £'000

Profit and Loss Account

Turnover 256,013 280,666 286,982

Profit / (Loss) After Tax (2,011) 953 2,479

Balance Sheet

Fixed Assets 7,998 8,515 7,448

Working Capital 2 (15,542) (14,893) (12,715)

Provisions for liabilities and charges (2,221) (3,534) (4,506)

Pension deficit (4,089) (3,726) (2,440)

(13,854) (13,638) (12,213)

Cash less borrowings 27,780 31,269 31,453

Assets Employed 13,926 17,631 19,240

Shareholders ' Funds 3 13,926 17,631 19,240

Order Book ** 225,400 149,200 181,900

Staff numbers *** 831 937 950

1 Represents amounts paid during the year.2 Excluding cash but including long-term liabilities.3 Including minority interest.** Order book = 12-month secured*** No of people = average number of people

Contact us on:

0800 0258 [email protected]

Scan the QR code toadd us as a contact

Follow us@OsborneNews

Documents

13287 OSBORNE AR lores spreads